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Heinrich v. Peabody Int'l Corp.

OPINION FILED DECEMBER 13, 1985.

EILEEN HEINRICH, SPECIAL ADM'R OF THE ESTATE OF FRANK HEINRICH, DECEASED, PLAINTIFF,

v.

PEABODY INTERNATIONAL CORPORATION ET AL., DEFENDANT (SAN-DEE BUILDING MAINTENANCE COMPANY, THIRD-PARTY PLAINTIFF-APPELLANT,

v.

BROOKSHORE LITHOGRAPHERS, INC., THIRD-PARTY DEFENDANT-APPELLEE).



Appeal from the Circuit Court of Cook County; the Hon. Paul F. Elward and the Hon. Thomas J. O'Brien, Judges, presiding.

JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

The Illinois Supreme Court remanded this cause for further consideration. San-Dee Building Maintenance Company (San-Dee) appeals from the dismissal of its claim for indemnity against Brookshore Lithographers, Inc. (Brookshore). In an unpublished opinion, we found that we lacked jurisdiction, but the supreme court reversed (Heinrich v. Peabody International Corp. (1984), 99 Ill.2d 344, 459 N.E.2d 935) and remanded with instructions to decide:

1. Whether implied indemnity exists in Illinois in view of the Contribution Among Joint Tortfeasors Act (the Contribution Act) (Ill. Rev. Stat. 1979, ch. 70, pars. 301 through 305)?

2. Whether San-Dee's third-party complaint states a cause of action for implied indemnity?

3. Whether the allegation that San-Dee loaned its servant to Brookshore states a cause of action apart from the label of indemnity?

The underlying action is a wrongful death suit. On December 11, 1979, Frank Heinrich was working on a trash compactor at Brookshore's plant, when Ignacio Ayala activated the compactor, decapitating Heinrich. Plaintiff alleged that San-Dee employed Ayala and that the two were negligent. San-Dee denied negligence and filed a third-party complaint against Brookshore seeking contribution and indemnity. With respect to indemnity, San-Dee alleged that Ayala was controlled and directed by Brookshore, and that Ayala was loaned with his consent to Brookshore. Brookshore moved to dismiss the indemnity count. The trial court granted the motion, ruling that indemnity was replaced by contribution under the Contribution Act. We have jurisdiction by virtue of the supreme court's remand. Heinrich v. Peabody International Corp. (1984), 99 Ill.2d 344, 459 N.E.2d 935.

Contribution and indemnity are distinct legal concepts: the elements of the actions differ as well as the measure of recovery. Contribution requires only that two or more parties share responsibility for an injury to plaintiff, and it proceeds from the theory that each party should contribute to the payment of the judgment in proportion to his or her responsibility. Indemnity, on the other hand, shifts the entire burden of the judgment to one party. Indemnity may be express, based on contract, or implied, based on a pretort relationship and a qualitative distinction in the culpable conduct of the defendants. (See generally, Heinrich v. Peabody International Corp. (1984), 99 Ill.2d 344, 348-49, 459 N.E.2d 935; Prosser, Torts secs. 50, 51 (4th ed. 1971).) The theory underlying implied indemnity is that "the law will * * * place the ultimate liability upon him whose fault was the primary cause of the injury." John Griffiths & Son Co. v. National Fireproofing Co. (1923), 310 Ill. 331, 339, 141 N.E. 739, quoted in Simmons v. Union Electric Co. (1984), 104 Ill.2d 444, 454, 473 N.E.2d 946.

A proper resolution of the issues before us requires an examination of the manner in which these distinct concepts have become historically and functionally intertwined. Lord Kenyon announced a rule against contribution among joint tortfeasors in Merryweather v. Nixan (K.B. 1799), 8 T.R. 186, 101 Eng. Rep. 1337, suggesting that judicial resources ought not be expended to assist one wrongdoer as against another. At that time, "tort" connoted intentional or wilful misconduct, and rigid procedure allowed defendants to be joined only when they acted "in concert." (See Prosser, Torts sec. 50, at 305 (4th ed. 1971); Reath, Contribution Between Persons Jointly Charged for Negligence — Merryweather v. Nixan, 12 Harv. L. Rev. 176, 178 (1898).) As the meaning of "torts" broadened to include negligence and strict liability, and as the rules of procedure were liberalized to permit joinder of independent actors, the great majority of courts in this country applied the doctrine uncritically, and the American common law came to be seen as prohibiting contribution among tortfeasors in all cases. See Northwest Airlines, Inc. v. Transport Workers Union of America (1981), 451 U.S. 77, 86-87, 67 L.Ed.2d 750, 760, 101 S.Ct. 1571, 1578; Prosser, Torts sec. 50, at 306 (4th ed. 1971).

The injustice of the rule against contribution did not escape all scrutiny, however. Scholars pointed out that the rule enabled a plaintiff to choose arbitrarily, maliciously, or even collusively which defendant would be required to pay the judgment, while other culpable defendants escaped payment entirely. Aside from the obvious unfairness of one defendant bearing the burden of others' fault, scholars suggested that the rule undercut important social policies. Defendants who could escape payment despite their liability would have less incentive to avoid injurious conduct, and less incentive to settle lawsuits. See Leflar, Contribution & Indemnity Between Tortfeasors, 81 U. Pa. L. Rev. 130 (1932) (hereinafter Leflar, 81 U. Pa. L. Rev. 130), and sources cited therein.

Eventually, courts recognized the harshness of the rule and sought to ameliorate its effects by expanding concepts of implied indemnity. Implied indemnity initially required a pretort relationship and a qualitative distinction in the conduct of the parties, but the doctrine increasingly focused on qualitative distinctions, also termed primary-secondary liability or active-passive negligence. (See Leflar, 81 U. Pa. L. Rev. 130.) Flaws in implied indemnity were detected early, Professor Leflar commenting:

"The distinction between misfeasance and nonfeasance may furnish a fairly good description of the cases, or of some of them, and it is not to be denied that it is a fundamental sort of distinction which is at the bottom of a great deal of the common law of torts. But it is not a clear distinction; misfeasance and nonfeasance shade into each other, and in many cases a given set of facts can with a little ingenuity be described as either the one or the other, at the describer's will." Leflar, 81 U. Pa. L. Rev. 130, 155-56.

Enlightened courts and legislatures rejected the rule against contribution. By 1932, over one-fourth of the States had abrogated the no-contribution rule: in 1955, about one-half had adopted some form of contribution. Today, only a handful of jurisdictions prohibit contribution among tortfeasors. See generally Kutner, Bibliography: Contribution Among Tortfeasors, 3 Rev. Litigation 297 (1983); Commissioners' Prefatory Note, Uniform Contribution Among Tortfeasors Act (1955 rev.), 12 Uniform Laws Annotated 34, 59-60 (1975); Leflar, 81 U. Pa. L. Rev. 130.

Illinois adopted the no-contribution rule in Nelson v. Cook (1856), 17 Ill. 443, 449, and extended it to negligent tortfeasors in Consolidated Ice Machine Co. v. Keifer (1890), 134 Ill. 481, 493, 25 N.E. 799. For many years, our supreme court adhered to the rule in the face of criticism, partly because the court preferred a legislative solution and partly because an alternative remedy, implied indemnity, was available. (See, e.g., Carver v. Grossman (1973), 55 Ill.2d 507, 510-11, 305 N.E.2d 161.) It is fair to say that in Illinois, the doctrine of implied indemnity developed hand-in-hand with the rule against contribution. See Muhlbauer v. Kruzel (1968), 39 Ill.2d 226, 230, 234 N.E.2d 790; John Griffiths & Son Co. v. National Fireproofing Co. (1923), 310 Ill. 331, 337-40, 141 N.E. 739; Nelson v. Cook (1856), 17 Ill. 443, 449; Sargent v. Interstate Bakeries, Inc. (1967), 86 Ill. App.2d 187, 229 N.E.2d 769; Reynolds v. Illinois Bell Telephone Co. (1964), 51 Ill. App.2d 334, 201 N.E.2d 322; Gulf, Mobile & Ohio R.R. Co. v. Arthur Dixon Transfer Co. (1951), 343 Ill. App. 148, 98 N.E.2d 783.

The doctrinal interplay between noncontribution and implied indemnity shaped criticism of the rule in this State. An advisory council composed of Illinois judges overwhelmingly recommended the adoption of contribution based on relative responsibility. (See Study Committee Report on Indemnity, Third Party Actions & Equitable Contributions, 1976 Report of the Illinois Judicial Conference 198 (hereinafter 1976 Report of the Illinois Judicial Conference 198).) A key consideration in the judges' rejection of the rule against contribution was that "indemnity, an all or nothing remedy, is also inequitable, in that it too compels one tortfeasor alone to shoulder the loss caused by several." (1976 Report of the Illinois Judicial Conference 198, 200.) The Committee found that the rule prohibiting contribution "resulted in a great deal of judicial effort in expanding the concept of indemnity creatively in order to avoid the harsh result inherent in the rule," and "caused confusion and uncertainty regarding the law." (1976 Report of the Illinois Judicial Conference 198, 216.) Further, because a defendant could enter into a ...


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